The effect of Medicare Part D on prescription drug composition and demand

Abstract

Purpose

The US Medicare Modernization Act of 2003 introduced optional prescription drug coverage, beginning in 2006, widely known as Medicare Part D. This paper uses up-to-date nationally representative survey data to investigate the impact of Part D not only on drug spending and consumption, but also on the composition of drug consumption. The paper aims to discuss these issues.

Design/methodology/approach

Specifically, the paper investigates whether Part D impacted the number of therapeutic classes for which drugs were prescribed, and also whether Part D lead to increased usage of drugs for specific medical conditions that typically receive drug-intensive therapies.

Findings

In addition to confirming findings from previous studies, this paper shows that Part D increased the number of therapeutic classes to which seniors receive drugs by approximately four classes. Part D also lead to increased usage of drugs used to treat upper respiratory disease, hypertension, and diabetes.

Originality/value

While mostly concurring with previous studies on the spending impacts of Part D, this paper is the first to shed light on other impacts of Part D, specifically with respect to its impact on therapeutic classes for which drugs are prescribed.

Citation

Zimmer, D. (2015), "The effect of Medicare Part D on prescription drug composition and demand", Journal of Economic Studies, Vol. 42 No. 2, pp. 170-185. https://doi.org/10.1108/JES-08-2013-0109